[1]Mike Santoli asks an interesting question this morning in his Barron’s column.

“The important question isn’t whether the market retrenches a bit, but whether that retrenchment would segue into a more definitive and momentous market top.”

This is a worthwhile query for exploration.

Mike calls a market pull back more likely than a top. He challenges da Bears to explain how a new top can form:

- During a broad rally, with “new highs swamping new lows?”

- While the LPL Current Conditions Index is at a post-2008 high?

- When credit spreads are tight and issuance of cheap corporate bonds and convertible securities rampant

- With percolating merger activity, and when Merrill Lynch bond strategists warned last week that “LBO risk” was on the rise?

- Do bull markets end amid public apathy toward equities? The typical investor has mostly shunned stocks, with outflows or weak inflows into stock funds the rule.

– With Vanity Fair magazine hyping the anti-greed sequel to the film Wall Street?

I will have to take issue with a few of Mike’s bullet points:

• The Current Conditions Index may be near highs, but the ECRI index has turned decisively lower. Further, the Consumer Metrics Institute real time daily economic data[2] of the ‘demand’ side of the economy has been shrinking at an annualized rate of over 1.5% during the trailing quarter.

My own views are that this is a cyclical bull rally within a secular bear market, and that it ends with an approximate 20-30% correction, followed by a broader trading range. As of today, we see no signs that the end is imminent. However, the closer we get to the day when the market believe a Fed removal of accommodation is imminent, the closer we will be to the top. Alternatively, once the current unwind of the armageddon trade[6] encounters the heavier resistance of Dow 11,500k and S&P 1250, the upwards momentum is likely to wane.